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The Structure of Hiring Costs in Germany: Evidence from Firm-Level Data

  • Mühlemann, Samuel

    ()

    (University of Munich)

  • Pfeifer, Harald

    ()

    (BIBB)

This paper analyzes the structure of hiring costs of skilled workers in Germany. Using detailed and representative firm-level data on recruitment and adaptation costs of new hires, we find that average hiring costs amount to more than 8 weeks of wage payments (4,700 Euros). The structure of hiring costs is convex, as an increase in the number of hires by 1% increases hiring costs by 1.3%. We find moderate effects of labor market institutions on the magnitude but none on the structure of hiring costs. Furthermore, we provide evidence in favor of monopsony power in the German labor market.

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Paper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 7656.

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Length: 37 pages
Date of creation: Sep 2013
Date of revision:
Publication status: forthcoming in: Industrial Relations
Handle: RePEc:iza:izadps:dp7656
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  17. Ulf Rinne & Klaus Zimmermann, 2012. "Another economic miracle? The German labor market and the Great Recession," IZA Journal of Labor Policy, Springer, vol. 1(1), pages 1-21, December.
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  19. Hirsch, Boris & Schank, Thorsten & Schnabel, Claus, 2009. "Work councils and separations: voice, monopoly, and insurance effects," Discussion Papers 62, Friedrich-Alexander-University Erlangen-Nuremberg, Chair of Labour and Regional Economics.
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